This gauge displays a composite stress score, not a recession probability. It measures how many of 24 macroeconomic indicators have crossed into cautionary or recessionary territory, with recessionary signals weighted three times more heavily than cautionary signals — reflecting their greater historical significance.
How the score is calculated:
Each of the 24 indicators is assigned 0 points (normal), 1 point (cautionary), or 3 points (recessionary). The needle reflects the total weighted score as a percentage of the maximum possible (72 points, if all 24 indicators were recessionary).
Historical calibration across confirmed recessions:
~3–5%
Normal expansion (e.g., 2017): Most indicators green; occasional late-cycle yellow signals produce minimal score.
~22–28%
Elevated concern, no recession (2022–23): Yield curve inverted, housing slowing, ISM softening — genuine stress that ultimately did not produce a contraction. A key calibration anchor for the Cautionary zone.
~65–75%
2001 Recession (mild, 8 months): Manufacturing collapse, labor market deterioration, ISM ~40, jobless claims approaching 450K. Housing and some leading indicators remained resilient, limiting the score relative to 2008.
~90–95%
2008–09 Great Recession (severe, 19 months): Near-simultaneous deterioration across all categories. HY spreads exceeded 20%, jobless claims peaked above 650K, housing collapsed 50%+, STL recession probability near 100%.
~100%
2020 COVID Recession (exogenous shock): Every indicator went red near-simultaneously. Reversed within months. The gauge cannot distinguish between structural deterioration and exogenous shocks; this episode should be interpreted with that limitation in mind.
Zone definitions:
🟢 Normal (0–25%): Consistent with expansion. A few cautionary signals are typical even in healthy economies.
🟡 Cautionary (25–50%): Mounting stress across multiple categories. Historically consistent with late-cycle slowdown or conditions that preceded confirmed recessions by 6–18 months.
🔴 Recessionary (50–100%): Scores above 50% have historically only been reached during confirmed NBER recession periods.
Note on Commodity & Inflation Stress indicators:
The four Commodity & Inflation Stress indicators (WTI Crude Oil, Copper, PPI All Commodities, and Core PCE Inflation) are displayed on the dashboard for analytical context but are not included in this stress score. These indicators measure preconditions and transmission mechanisms for recession — elevated commodity prices and inflation force the Fed tightening that causes recession — but they can also occur during periods of strong growth. Including them would inflate the score during inflationary expansions that do not produce recession (e.g. 2021-22). Analysts should use the commodity and inflation panel as supplementary context alongside the scored indicators.
The gauge is a monitoring tool, not a forecast. Policy responses, exogenous shocks, and structural economic changes can all alter outcomes that the indicators would otherwise imply.